OVERVIEW AND LEADERSHIP VIEWS

Transcription

1 2015 OVERVIEW AND LEADERSHIP VIEWS

2 FORWARD-LOOKING STATEMENTS AND OTHER IMPORTANT DISCLOSURES The forward-looking information contained in this presentation is presented for the purpose of assisting shareholders in understanding business and strategic priorities and objectives as at the periods indicated and may not be appropriate for other purposes. Forward-looking statements may include, but are not limited to, statements about anticipated future events or results including comments with respect to the Company s objectives and priorities for 2016 and beyond, and strategies or further actions with respect to the Company and its subsidiaries, its products and services, business operations, and financial performance and condition. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions or include words such as expects, anticipates, intends, plans, believes, estimates or similar expressions concerning matters that are not historical facts. Such statements are based on current expectations of the Company s management and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and those affecting the financial services, energy, resources, agriculture and real estate industries generally. All such statements constitute forward-looking information within the meaning of securities law and are made pursuant to the safe harbour provisions of applicable securities laws. A number of risks, uncertainties and other factors may cause actual results to differ materially from the forward-looking statements contained in this presentation, including, among other factors, those referenced in the section entitled Risk Factors in the Company s annual information form for the year ending December 31, 2015, which include, but are not limited to, general economic and market conditions; the Company s ability to execute strategic plans including the ability to complete acquisitions and dispositions effectively; the Company s ability to meet financial obligations; the performance of the Company s principal subsidiaries; the Company s ability and the ability of its investee companies to raise additional capital; the availability of equity and debt financing and/or refinancing on acceptable terms; risks relating to trading activities and investments; competition faced by the Company; regulation of the Company s businesses; successful integration of the Company with acquired businesses and the realization of any anticipated synergies; risks associated with the Company s operating businesses and the Company s investment holdings in general, including risks associated with oil and gas and mining exploration; risks of operating in foreign jurisdictions; development and production activities, environmental risks, inflation, changes in interest rates, commodity prices and other financial exposures; the availability and adequacy of insurance coverage for the Company and its subsidiaries; maintenance of minimum regulatory capital requirements for certain of the Company s subsidiaries; potential liability of the Company and its subsidiaries under securities laws and for violations of investor suitability requirements; and the ability of the Company and its subsidiaries to attract and retain key personnel. The preceding list is not exhaustive of all possible risk factors that may influence actual results, and is compiled based upon information available as of June 6, Forward-looking statements contained in this presentation are based upon assumptions about the future performance of the Canadian, European and United States economies, which were material factors considered by management when setting Dundee s strategic priorities and objectives. In determining expectations for economic growth in the financial services, energy, resource, agriculture and real estate sectors, the Company considered historical economic data provided by the Canadian government and its agencies, and market and general economic conditions, which factors are unpredictable and may impact the Company s performance. Dundee Corporation, Dundee 360 Real Estate Corporation, Dundee Agriculture, Dundee Sustainable Technologies and Dundee Capital Markets are trademarks owned by Dundee Corporation, used under license. Copyright 2016, Dundee Corporation. All rights reserved. 4 DUNDEE CORPORATION 2015 Overview and Leadership Views

3 CHAIRMAN S MESSAGE Capital markets around the world continued a trend of volatility in 2015, which carried over from On many fronts, 2015 was another challenging year, and for Dundee Corporation, marked an important turning point in its long history. Under the leadership of David Goodman as President and Chief Executive Officer, and with the support of his brother Mark Goodman in his role as Executive Vice President and Chief Operating Officer, we believe Dundee Corporation has weathered the worst of the storm as they have steered the Company to safer waters. In the process, they have charted a clear course to success. The resetting of our corporate compass will see the Company focus on four key industries that have been the hallmark of our success for many decades: wealth management, real estate, natural resources and agriculture. Decisions were made and actions taken in 2015 that now allow us to focus squarely on growth in 2016 and beyond. These decisions balanced short-term needs with the longerterm health and prosperity of the Company. A focus on cost-cutting and disciplined capital allocation has stabilized our liquidity outlook. Underperforming businesses in our portfolio were either restructured or sold. For those that remain, there is a clear roadmap in place to help turn around their fortunes. Along that journey, they will be supported by our merchant capital group and its team of experts. This work, coupled with our return to the wealth management business, will be the engine of growth propelling Dundee forward. I would like to thank our Board members for their continued support and sage counsel. In particular, I would like to thank those directors who did not stand for re-election this year. The contributions made by Dr. Frederick H. Lowy, Ellis Jacob and Jeremy Soames were significant and we thank them for their collective service to Dundee Corporation over many years. A focus on cost-cutting and disciplined capital allocation has stabilized our liquidity outlook. I would also like to thank our executive management team for their dedication and success in repositioning our business. Their hard work saw Dundee s employees and key partners aligned to pursue future growth opportunities across our four key industries. And finally, I would like to thank our shareholders for their ongoing support. We truly believe we have the right team in place, at the right time, to reward them through the creation of meaningful long-term shareholder value. ROBERT McLEISH Chairman of the Board DUNDEE CORPORATION 2015 Overview and Leadership Views 1

4 DUNDEE CORPORATION IS A CANADIAN HOLDING COMPANY WITH INVESTMENTS IN FOUR CORE BUSINESS AREAS. Wealth Management Real Estate Natural Resources (mining and energy) Agriculture 2 DUNDEE CORPORATION 2015 Overview and Leadership Views

5 CEO S MESSAGE For Dundee Corporation, 2015 was a very trying year. Indeed, it was one of the most difficult in our long and storied history. There is an old saying: Adversity does not build character. It reveals it. In our case it has revealed a passionate, resilient team, committed to building and preserving value for our clients and shareholders. In the face of some of the strongest market headwinds in recent memory, we took steps to stabilize our business. These steps were taken with a view to the long-term health and prosperity of our business. With a focus on cost-cutting, capital allocation and disciplined management, our business became leaner. In the process, we added muscle, and solidified the foundations which underpin our business. Our focus on liquidity management was a top priority in 2015 and has carried over into This led us to initiate a process in late 2015 to renegotiate the terms on some of our outstanding preferred shares, which we successfully completed in early Ultimately this relieved some of the short-term liquidity pressure we were facing and allowed us to focus on some of the longer-term issues facing our business. Our focus on liquidity management was a top priority in 2015 and has carried over into David Goodman, LLB, CFA President & Chief Executive Officer Late in 2015, as part of our strategic planning process, we reviewed turnaround options for our retail brokerage division, Dundee Goodman Private Wealth. We came to the conclusion that the significant capital and talent requirements for this distribution channel did not align with our wealth management strategy. This business was in a hyper-competitive segment of the market and we lacked the scale necessary to stay competitive and profitable. As we were reviewing our options, DUNDEE CORPORATION 2015 Overview and Leadership Views 3

6 we were approached by Echelon Wealth Partners regarding the sale of Dundee Goodman Private Wealth. The subsequent agreement enabled us to significantly reduce our costs, free up needed capital and enter into a distribution agreement with Echelon. This sale will result in approximately $40 million of ongoing savings and liquidity to Dundee, which will allow us to strategically redeploy capital to other parts of our business with better growth prospects. We thank those advisors and employees who have transferred to Echelon Wealth Partners for their entrepreneurial spirit and their service to our organization. We wish you all well in your future with Echelon. To improve the liquidity of some of our investments in the mining industry, the Company participated in a plan of arrangement last year, which resulted in the acquisition of Oban Mining Corporation. Three of our investee companies, Eagle Hill Exploration Corporation, Corona Gold Corporation and Ryan Gold Corporation, participated in this transaction. This allowed us to trade our ownership stake in these companies for a meaningful equity position in Oban Mining, which has seen its equity value improve significantly to date in The end result is that Dundee Corporation now holds a more liquid position in a company with better growth prospects and which is already being rewarded by the market. Our merchant capital group continues to do some of the heaviest lifting within our Company. The breadth of our existing investment portfolio dictates a significant need for attention. My brother Mark Goodman and his team have been instrumental in the turnaround and improved fortunes of many of our investee companies. Their accomplishments are significant and important to the current and future health of the Company. But their work continues. Through sheer dedication and perseverance they will continue to contribute to the larger turnaround that is underway at Dundee. DUNDEE CORPORATION PORTFOLIO 2% Industrials $24.8 2% Other $19.1 6% Pharmaceuticals $73.3 8% Agriculture $ % Real Estate $ % Mining $160.5 Capital Allocation by Industry Sector ($ Millions)* 19% Financial $ % Energy $253.8 *As at March 31, DUNDEE CORPORATION 2015 Overview and Leadership Views

7 The mission being led by Mark goes beyond simply improving the tangible results of our investee companies. A paradigm shift is underway within our merchant capital group. Going forward, we will espouse and nurture an investment philosophy anchored by three defining principles. Each of our businesses will be self-financing; each will be led by a seasoned management team; and each will be cash flow positive. Let me elaborate on these principles. 1 We will move away from being the sole financier for investee companies. We will continue to offer seed capital, but we will want to see it invested side-by-side with the capital of our partners and the respective management teams. Ultimately, we will expect our investee companies to be self-funding and capable of accessing capital markets on their own. 2 We will ensure each of our investee companies is led by a seasoned management team with a proven track record of success. Not only will they lead our businesses, they will also be invested in them. Being a shareholder motivates one to think and act like a shareholder and there is no better way to ensure interests are aligned. 3 We will demand that our businesses be positioned to become cash flow positive in short order. In fact, our investments should typically need no more than two to three years to achieve this goal. Once they become cash flow positive, they also become more attractive to other investors. This, in turn, helps ensure they are contributing to the corporation s overall success, while also providing us with strategic options to consider. DUNDEE CORPORATION 2015 Overview and Leadership Views 5

8 WHAT CAN SHAREHOLDERS EXPECT FROM DUNDEE IN 2016? Much was achieved in 2015 but that has merely set the stage for what will be a busy Here are some of our top strategic priorities: COMPLETING the spin-off of our capital markets division. Moving to a partnership model where employees are also owners of the business is our goal. We believe this model has proven resilient over many years and many cycles in the capital markets. We believe it is the best way to align our interests with the entrepreneurial leaders who work in that group. LAUNCHING a qualifying transaction for our SPAC (special purpose acquisition company). ENABLING Blue Goose to be in a position to access third party capital. With a new management team at the helm, we believe this is the appropriate next step in Blue Goose s evolution. Blue Goose has the potential to become a significant success within our portfolio. Installing new management, empowering them to drive change and enabling them to stand on their own so they can access capital are together, in our view, a formula for success. It is a model we want to implement at other companies within our portfolio. A RESTRUCTURING of United Hydrocarbons remains a top priority. In 2015, much was done to cut costs and streamline operations with an eye toward preserving cash without sacrificing strategic optionality. In early 2016 we began to see a recovery in oil prices and some optimism return to markets. This in turn, we believe, will help us as we pursue potential partnerships and other strategic alternatives designed to unlock value for shareholders and Dundee. United Hydrocarbons has assets which we believe are world-class. Now, it is up to us and management to optimize those assets and capitalize on opportunities to create true and meaningful value. FORTHCOMING visibility into the potential of pharmaceutical company TauRX. Phase 3 clinical trial results are expected in early Q These results should shed much light on the future path of TauRX and its potential to produce what could potentially be a life-altering drug for thousands of Alzheimer s patients around the world. 6 DUNDEE CORPORATION 2015 Overview and Leadership Views

9 One of our most important strategic initiatives is the build-out of our Wealth Management business. Developing a business where historically we have had great success is a top priority for the Company in 2016 and beyond. It is also one of the best opportunities, we believe, to build a business that can deliver regular, reliable and predictable cash flows on an accelerated basis. We are business owners helping other business owners with their unique financial challenges. We believe that targeting and servicing the unique needs of the high-net worth and ultra-high-net worth markets presents a significant opportunity for Dundee. These segments are made up of successful business owners, entrepreneurs, corporate executives and other individuals with sophisticated wealth management and financial services needs. It is estimated that over the next decade these segments will be involved in the creation and transfer of a significant amount of wealth in Canada, which some third parties estimate could total as much as four trillion dollars. By providing them with a seamless, integrated suite of client-centric services, we believe we can successfully differentiate ourselves from our competitors. As entrepreneurs and business owners, we believe we are uniquely positioned to capture this market opportunity. Our approach will go beyond merely managing money. It will involve taking a holistic approach to wealth management that encompasses a partnership mentality. We are business owners helping other business owners with their unique financial challenges. By offering a bespoke service that combines wealth management, business advisory, group pension and benefits, insurance, tax advisory, estate management, real estate and other services, we are confident we can set ourselves apart. A key component of our wealth management strategy is linked to our ownership of Sotheby s International Realty Canada. In Canada, Sotheby s is one of the leading brokers catering to the luxury and high-end residential real estate market. We believe the Sotheby s brand resonates strongly with affluent clients, and provides us with an opportunity both in terms of enhancing our offer and being a gateway to high-net worth and ultra-high-net worth clients. We feel we are well positioned to leverage the association between Dundee and Sotheby s. To build the Wealth Management business, we will commit capital and human resources to developing a national network of business partners. These partners will be managed by Dundee as they deliver sophisticated and wide-ranging services to our clients. Our goal will be to build this business both organically and through acquisitions. DUNDEE CORPORATION 2015 Overview and Leadership Views 7

10 IN CONCLUSION We have closed the chapter on a tumultuous At the start of 2016, we have seen some stability return to capital markets. In turn, our key businesses have begun to show improvement, particularly those in the resources sector. Much more, however, needs to be done. We must remain vigilant as we continue to streamline and strengthen our businesses and our team at the head office. Our recalibrated focus can now shift for the remainder of 2016 and into 2017 to initiatives that will drive the future growth of our business. A focus on controlling and cutting costs in a responsible manner is now deeply ingrained in our culture as we ensure we maintain more than adequate liquidity levels for our business. We continue to exercise the utmost discipline as we allocate capital to help grow our business. Specifically, we are investing in our wealth management business as well as exploring opportunities to accelerate its growth. The benefits of the realignment, cost-cutting and reorganization work done over the past 18 months are beginning to bear fruit. This, in turn, is allowing us to pivot from a defensive posture to one that positions us to pursue opportunities in the market. Our recalibrated focus can now shift for the remainder of 2016 and into 2017 to initiatives that will drive the future growth of our business. Our team has demonstrated courage in the face of adversity. And we maintain a sense of urgency in everything we do even as some optimism is returning to capital markets. For this, I am thankful to all of our employees who continue to show steadfast determination. I am also grateful to our clients for their business and to our board members and partners for their ongoing support. Finally, I want to thank our shareholders for continuing to stand by us as we execute on our strategy. Much has been achieved, yet much more remains to be done. My team and I remain committed to the task at hand and look forward to restoring growth to our business and building long-term value for our shareholders. David Goodman, LLB, CFA President & Chief Executive Officer 8 DUNDEE CORPORATION 2015 Overview and Leadership Views

11 EXECUTIVE OFFICE 1 Adelaide Street East Suite 2100 Toronto, Ontario M5C 2V9 dundeecorporation.com Registrar and Transfer Agent Computershare Investor Services Inc. 100 University Avenue 8th Floor Toronto, Ontario M5J 2Y service@computershare.com Stock Listing The Toronto Stock Exchange Stock Symbol DC.A DUNDEE CORPORATION 2015 Overview and Leadership Views 9

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